Indian oil demand to bounce back in 2018, says ESAI Energy

10/27/2017

WAKEFIELD, Massachusetts -- India’s consumption of oil products will accelerate in 2018 after unusually slow growth in 2017, according to ESAI Energy’s newly published Asia Watch Products. The report explains that, due to a faltering economy, demand growth slowed for almost every fuel in 2017, with kerosene, naphtha, and fuel oil use all declining. Petroleum coke demand was stagnant this year after booming in 2016. Consumption of all petroleum products, except kerosene, will return to faster growth in 2018.

After total oil demand growth slowed to just 60,000 bpd in 2017, consumption should accelerate to 200,000 bpd in 2018 as the economy recovers from multiple disruptions this year. Petroleum coke contributed most to the slowdown in oil demand in 2017. After growing by 140,000 bpd in 2016, petcoke consumption stayed flat this year due to higher prices and a sharp decline in cement manufacturing. Next year, petcoke demand should return to growth of 40,000 bpd. Among oil products, only kerosene use will decline again next year amid a government push to switch households that use kerosene for cooking to LPG.

“Reforms to the Indian economy negatively impacted growth in 2017,” said ESAI Energy Analyst Amrit Naresh. “Demonetization removed 86% of the country’s currency from circulation at the end of last year, and nationwide tax reforms were implemented in the middle of 2017. "Together, these reforms disrupted industries and businesses across the economy, said Mr. Naresh. “Economic conditions should improve in 2018, fostering industrial activity and allowing oil demand growth to strengthen.”